Barclays Capital 2010 Global Financial Services Conference

Action plans for lagging units - Insurance Key highlights ■Q2 10 performance significantly impacted by bodily injury reserving relating to prior period policies Improved under-writing policies reducing risk and loss. rates ■ Above market premium increases since Jan 09 The combination of higher premiums and refined risk mix are improving the loss ratio of the business Focus on cost reduction and improving jaws Industry-wide personal injury claims trends² % 150% Loss rates 120% 90% XRBS Improved underwriting reducing loss rates1 New Business Renewals Combined 60% Jan-09 May-09 Sep-09 Jan-10 May-10 Positive pricing actions ³ starting to feed through Mkt. premium change index (Jan 2009 = 0%) 000s % I Number of Claims -Y-o-Y Change 700 20% 50% DL Churchill Market 600 500 400 300 اااس 40% 10% 30% 0% 20% 10% 200 -10% 0% 2001-2002- 2003- 2004- 2005- 2006-2007- 2008- Jan-09 May-09 Sep-09 Jan-10 May-10 02 03 04 05 06 07 08 09 20 1 Modelled loss rates based on Direct Line scored written loss rates. 2 Source: DWP CRU Database, Morgan Stanley Research 3 Source: Consumer Intelligence, DfT, NOP, Strategy team research & analysis

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